U.S. consumers are less interested in buying a foreclosed home than they were a year ago, which could slow a housing market rebound as banks prepare to sell a record number of repossessed properties, according to a survey released on Thursday.

The share of adults 18 and over who would consider buying a foreclosed property fell to 45 percent this month from 55 percent a year ago, an on-line survey conducted May 10-12 by Harris Interactive for Trulia.com and RealtyTrac found.

In the first quarter, banks repossessed a record of nearly 258,000 properties, on pace to shatter last year's annual record of more than 918,000 properties, according to real estate data company RealtyTrac.

For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes, said Pete Flint, chief executive of real estate website Trulia.com.

Unemployment near 10 percent is overwhelming government and lender efforts, such as the Home Affordable Modification Program (HAMP), to keep struggling borrowers in their homes.

Combined with decreased consumer interest around purchasing a foreclosure it may take even longer than anticipated to see true health return to the real estate market, Flint said in a statement.

Foreclosure sales are a main element in keeping U.S. home prices from rising much any time soon. Prices have stabilized after tumbling by 30 percent on average from 2006 peaks, but could dip a bit further because of foreclosures and unemployment .

There is somewhat less of a stigma about owning a foreclosed home, however, the survey found, with 78 percent seeing a downside to such ownership compared with 85 percent a year ago. Hidden costs remained the top concern.

Sales of homes in the foreclosure process accounted for more than 30 percent of total sales in the first quarter, according to RealtyTrac data.

Sales should rise for real-estate owned (REO) properties, which banks have repossessed, and short sales through the year as first-time buyers and investors seek bargains, RealtyTrac said.

Buyers are taking a more realistic about foreclosure purchases, according to the survey.

Buying a foreclosure property still provides an opportunity for dramatic savings on a home, but the time and effort involved in executing a short sale, bidding against other buyers for an REO, or the need to do renovations may be issues for buyers not as focused on getting the best price, said Rick Sharga, senior vice president at RealtyTrac.


Only 1 percent of homeowners said walking away from their mortgage is their first choice if unable to pay, with 69 percent favoring a loan modification,

The poll also found that 59 percent of homeowners with a loan would not consider walking away from their house regardless of how under water they were. Being under water means owing more on a mortgage than the house is worth.

However, the remaining 41 percent of those polled said they would at least consider walking away if in that position. Walkaways have boosted the pool of bank-owned properties that need to be put back on the market, keeping pressure on prices.

The most likely buyers of bank-owned homes are young first-time purchasers, the survey found.

Fifty-seven percent of renters are at least somewhat likely to buy a foreclosed home, compared with 40 percent of current homeowners. At least 63 percent of renters aged 18 to 44 are at least somewhat likely to buy a foreclosure, more than double the share of renters age 55 and older.

(Editing by James Dalgleish)